Merger Integration

Merger Integration

TEAM MEMBERS Engagement Manager Nalin Singla Consultants Aaron Byrne Senior Consultant Erin Engels Senior Consultant Eriko Ito Senior Consultant Andy Schultz Consultant Carissa Holler Library Information Services Faculty Advisor Dr. Anju Seth

Project Background & Approach Updated Tool Overview Reasons for Proposed Mergers Average Value of Proposed Mergers Companies With Unrealized Value Areas of Synergy Reasons for Failed Mergers Market Overview Pre-merger Market Post-merger Market Competitive Analysis Trends Recommendations Appendices AGENDA

Project Background OSBI Project Goals • BearingPoint had created a whitepaper entitled “Unleashing your company’s unrealized value: Transformation through business integration”. • The whitepaper was validated by the OSBI team as a part of the previous project to create a tool which measured the unrealized values of companies during M&A activities • Two industries were analyzed • Banking • Electronics • Update & analyze the value tool for additional industries • Telecommunications • Software • Perform analysis related to unrealized value of proposed merger synergies • Define and estimate market size for pre-merger and post-merger services • Provide a competitive analysis of the pre-merger, transaction support & post-merger integration services • Identify significant trends in U.S. and global M&A PROJECT BACKGROUND & APPROACH

PROJECT BACKGROUND & APPROACH Analyze unrealized value of proposed mergers Identified value drivers from S-4 reports Updated tool for 3rd & 4th industry Identified reasons for proposed mergers Identified reasons for failed mergers Identified 3rd & 4th industry Identified areas of synergy Conduct competitive analysis of merger services market Conducted competitive analysis of key consulting firms providing M&A services Analyzed merger services market Analyzed pre/post merger market Analyzed M&A market trends Analysis & Evaluation Data Gathering Consistent client interaction & input This diagram represents the process flows for the project. The remainder of this report will expound upon the arrows highlighted on this slide.

UPDATED TOOL OVERVIEW The structure of the “Value Predictability Tool” developed by the OSBI team • BearingPoint created a whitepaper entitled “Unleashing Your Company’s Unrealized Value: Transformation Through Business Integration” • Electronics and Banking industries were selected as analysis targets based upon an industry evaluation and selection model: 22 industries were ranked on the basis of M&A activity, industry beta, market cap. & availability of company’s financial data • Companies were evaluated with respect to generic and company-specific value drivers for two industries (Banking & Electronics). Each of the industry specific driers are mapped to accounting ratios. • The tool analyzes changes in the financial performance of a company for a period of eight (8) years with the changes in financial performance of the overall industry for the same period • The tool identifies companies who lost value due to M&A activity and provides a positive/negative score for each company which tells how a company compared to the industry average 1 2 3 4 5 Industry Selection Value Drivers Tool Architecture Whitepaper on Unrealized value1 Companies who lost value due to M&A Activity M&A activity Financial Data avail compare Generic Drivers Company specific data 80% 20% Industry Beta Market Cap. Industry Drivers Industry average Weighted Average Ranked Note: “Industry selection”, “Value drivers” & “Tool architecture” slides are attached in the appendix

UPDATED TOOL OVERVIEW – Industry Selection Industries for further analysis were identified based on their ranking across three different scenarios. The four industries selected ranked highest in at least two of the three scenarios Industry Name Scenario 1 Scenario 2 Scenario 3 1. Electronics 2. Banking 3. Software 4. Telecommunications Top 4 Industries Industries not considered NOTE: Retail/Wholesale was number one in ranking, but was not used because of the diversity of the industry and value drivers

REASONS FOR PROPOSED MERGERS - Electronics “Consolidation of product offerings” & “Gaining technical expertise in a particular area” are the top reasons for mergers in the electronics industry Future Trend “Complementary products” & “R&D capabilities” would be the major drivers for M&A activity in the electronics industry Sources: Value Predictability Tool and Mergant Online

REASONS FOR PROPOSED MERGERS - Banking “Financial risk and superior performance to shareholders” & “Financial strength in assets & revenues” are the top reasons for mergers in the banking industry Future Trend “Market reach”, “Greater distribution network” & “Gaining competitive position” would be the major drivers for M&A activity in the banking industry Sources: Value Predictability Tool and Mergent Online

REASONS FOR PROPOSED MERGERS – Software & Telecom Software Future Trend - Banking “Complement product range”, “Expansion into other industries” and“Market share” would be the major drivers of M&A activity in the software industry Telecommunication Future Trend - Telecom “Geographic Reach”, “Service range” & “Bundled technology” would be the major drivers of M&A activity in the telecommunications industry 10 9 6 15 Sources: Value Predictability Tool and Mergent Online

AVERAGE VALUE OF PROPOSED SYNERGIES The losses of the bidders exceed the gains of targets from 1998 through 2001 by $134 billion Billion $ -4 +24 -240 Aggregate dollar return to acquiring firm shareholders Aggregate difference between acquiring & target firm shareholder value 1980 1990 1998 2001 In 1998-2001 a small number of firms accounted for huge “aggregate dollar losses”, which means that without these announcements, the wealth of acquiring shareholders would have increased Note: The report analyzed data from 1980 – 2001 but results provided only for 1997-2001 to maintain consistency in overall analysis of the whole project Source: Wealth destruction on a massive scale? By Moeller, Schlingemann, Stulz – August 2003

COMPANIES WITH UNREALIZED VALUE - Electronics Thirty-one percent (31%) of electronics companies that underwent M&A activities underperformed based on value predictability tool analysis. 100% 4% 90% 20% 80% 70% 24% 60% Companies that underwent M & A Activities 50% 40% 30% 53% 20% 10% 0% Electronics 80% of companies in electronics industry underwent M&A activities between 1997 and 2000. No M&A Activities and Underperforming No M&A Activities and Realized Value M&A Activities and Underperforming M&A Activities and Realized Value Source: Value Predictability Tool

COMPANIES WITH UNREALIZED VALUE - Banking Forty-one percent (41%) of capital markets and banking companies that underwent M&A activities underperformed based on value predictability tool analysis. 100% 14% 90% 7% 80% 70% 33% Companies that underwent M & A Activities 60% 50% 40% 30% 47% 20% 10% 80% of companies in banking industry underwent M&A activities between 1997 and 2000. 0% Banking No M&A Activities and Underperforming No M&A Activities and Realized Value M&A Activities and Underperforming M&A Activities and Realized Value Source: Value Predictability Tool

COMPANIES WITH UNREALIZED VALUE – Software & Telecom 100% of companies on value predictability tool analysisunderwent M&A activity between 1997-2000 Software Software 21 software companies underwent M&A activities between 1997 and 2000. Telecom Telecommunication • 17 companies underwent M&A activities between 1997 and 2000 • 1 company performed lower than the industry avg. • 3 companies did not realize significant value (almost same as the industry average) Source: Value Predictability Tool

Current tool Industry Driver Scoring Reverse engineering M&A Activities Reason Cited Composite Scoring Industry Driver Scoring M&A Activities Reason Cited Generic Driver Scoring Correlation -1 -0.5 -0.2 0.2 0.5 1 Measurement Strong negative correlation Weak correlation (indifferent) Strong positive correlation AREAS OF SYNERGY– Reverse Engineering of the Tool • LOGIC USED • Match relevant companies to industry specific drivers. • Pick the Composite Score and the Industry Specific Drivers Score, and calculate the correlation. (“CORREL” excel function) • If there are less than five relevant companies cited in each driver, neglected the correlation • Sorted as “Strong Impact ” if the correlation is more than 0.5, “Weak Impact” if it is between -0.2 and 0,2, and “Adverse Impact” if it is less than -0.5

Number of companies stated Number of times stated Correlation AREAS OF SYNERGY– Electronics “Resources” and “Economies of Scale” are highly correlated with the firm’s overall performance Though fewer firms stated, “Resources” and “Economies of Scale” have a large impact on the firm’s overall performance. Electronics Value Drivers High number of firms stated, “Expertise in Area” and “Capture Market Segment,” has relatively high impact on the firms overall performance. Most companies stated “Complementary products,” as a reason for merger but it actually doesn’t correlate with a firms overall performance. “R&D capabilities,” “Big Size & Bargaining Power,” and “Product List” don’t impact the overall performance. *Financial Resources 0.75 (4 firms), Alternative Non-M&A activities that improve competitive position 0.93 (3 firms), To generate cash to pursue further acquisition strategy N/A (1 firm), Workforce N/A (1 firm), Brand Equity/Loyalty N/A (1 firm)

Number of companies stated Number of times stated Correlation AREAS OF SYNERGY– Banking “Share Strength” and “Marketing Advantage” have the highest correlation “Share Strength,” “Marketing Advantages,” “Market Share,” and “Grater Distribution Network” are highly correlated to the firm’s overall performance. However, fewer firms stated “Share Strength” and “Marketing Advantages” as their reason for M&A. Although more firms stated “Opportunity to Expand into Domestic/International Market,” “Good financial performances,” ”Bigger Management and Economies of Scale,” “Gaining Competitive Position,” and “”Financial Strength in Assets, Revenue” as their reason for M&A, these factors are not correlated to the firm’s overall performance. *Ownership rights (merger percentage) 0.91 (4 firms), Capital availability 0.53 (4 firms)

Telecommunication *Wi-Fi Capabilities & Alliances -0.28 (3 firms), Customer service --call center operations N/A (2 firms), Equipment manufacturers' performance (ie Motorola) N/A (2 firms), R&D Spending for future network capabilities N/A (2 firms), Technology-based subsidiary performance (IP/R&D)--indicator of underlying value N/A (1 firms), Mobile Game sector value within phones N/A (1 firms), Multimedia messaging N/A (1 firms), Venture Backed startups N/A (0 firms) Number of companies stated Number of times stated Correlation AREAS OF SYNERGY– Software & Telecom “Growth Areas (Software)” and “Geographic Reach (Telecom) ” have the significant impact on firms’ composite scores. Software Though fewer firms stated, “Growth Areas” and “Market Share” have high correlation with the firms’ overall performance. Even though stated by many firms, “Alliances/ Partner-ships with Complementary Product Mfgs” has a slightly negative effect. *Operating costs - salaries are big costs (Solution: Open source alternatives, outsourcing, etc.) -0.37 (3 firms), R&D spending (for product based companies) -0.84 (3 firms), Penetration of Emerging/Expanding International Markets (particularly China) N/A (2 firms) “Geographic Reach” is highly correlated with the overall performance. “Services” and “Bundled Technology” are indifferent.

AREAS OF SYNERGY - Key Success Factors and Opportunities Drivers with strong future trends and high correlations are key success factors for industries Electronics Banking Software Telecom Drivers Resources (Threshold Size to compete with large players) Increased size Would help increase the bargaining power Financial Risk and superior performance to shareholders Opportunity to expand into domestic/international market Similar Vision and customer service/marketing approach Complementary products (Consolidate Product Offering) Alliances/Partnerships w/ complementary product mfgs. Product list (Breadth of Service Offerings & solutions) R&D capabilities (Complements Technical Spending) Bigger Management and Good economies of scale Customer Relations (Combat growing competition) Geographic Reach --market size, customer base Expertise in area (Technical Know How) Financial Strength in Assets, Revenue Attractiveness to its future employees Distribution Channels (Network) Specialized Service Expansion Services--wireless, voice, data Gaining Competitive Position Good financial performances Greater distribution network Capture Market Segment Tax Benefits (Taxation) Marketing advantages Financial Resources Broader product line Bundled technology Economies of scale Share Strength Growth areas Market share Market share Others Others Others Others # of times cited 29 24 20 18 17 15 9 8 7 7 6 6 9 25 24 21 20 20 19 18 17 17 16 15 13 5 5 8 17 9 8 8 10 9 6 15 future trend correlation

REASONS FOR FAILED MERGERS – Numerical data Longer days to complete, large transaction value, and more competition are major reasons for M&A losses. Out of 4,136 acquisition announcements, 87 are responsible for 43.4% of the loss. (comparison between +1day and -2day of announcement) Large loss deals have a large transaction value, but there is nothing noticeable when it is normalized by firm market value. Days to completion is longer in large loss deals Equity payment is used more often with large loss deals Acquisitions of public firms are more likely to be large loss More competition could explain the large loss deals Source: Sara B. Moeller, "Wealth destruction on a massive scale? “

REASONS FOR FAILED MERGERS – Conceptual Data Sources: Sara B. Moeller, "Wealth destruction on a massive scale?”/ “Mergers, Acquisitions, and Organizational Effectiveness” iPlanet/ “Market Failures” HBS 700127 - 2004

MARKET SUPPLY = M&A TRANSACTIONS Pre-merger Market Post-merger Market • Supply can be estimated, but remains unpredictable in the M&A market. • Supply is driven by the need for growth through acquisition, and/or consolidation within an industry • Within a given M&A transaction supply is defined by two phases SUPPLY SUPPLY Demand for Services ACQUIRER Demand for Services NEW ENTITY Demand for Services TARGET SUPPLY SUPPLY MARKET DEMAND = NEED FOR SERVICES • Demand for services is plentiful, but within a highly competitive environment IT JOINT VENTURE / PRE-MERGER OPPORTUNITIES MANAGEMENT CONSULTING FIRMS FILL POST-MERGER SERVICE DEMAND INVESTMENT BANKS FULLFILL PRE-MERGER SERVICE DEMAND SUSTAINED RELATIONSHIPS OPPORTUNITIES FOR FUTURE SERVICES MARKET OVERVIEW -Market Definition Total market size is equal in the pre and post-merger markets, assuming unsuccessful mergers are discounted. The current market size for consulting firms is further refined by the number of merging and merged entities that use consulting services in the pre and post-merger market respectively. However, the current market size does not reflect future market size. Demand for services can, and should, be stimulated by consultants who educate their clients about the tangible benefits of consulting involvement

Top M&A Investment Banks – 2003 Disclosed Values Advisor Fees ($mil) # of Deals Advisor Fees ($mil) # of Deals Morgan Stanley $117.5 11 HSBC Holdings 28.0 1 Goldman, Sachs 84.9 10 Allen & Co. 27.9 2 Citigroup 74.5 8 Keefe Bruyette & Woods 17.6 8 Credit Suisse First Boston 49.8 8 Bear, Stearns 16.7 9 UBS 49.0 3 Sandler O’Neil 16.2 7 Merrill Lynch 36 5 Banc of America 16.1 5 Deutsche Bank 34.7 5 Stephens 9.4 1 J.P. Morgan 31.5 6 Dresdner Leinwort Wasserstein 7.4 1 Lehman Brothers 30.6 6 Rothschild 6.6 1 Rohatyn Associates 28.0 1 Brown, Gibbons, Lang 5.4 1 PRE-MERGER MARKET Strategy Consulting firms are becoming increasingly more involved in pre-merger activities. There are two options for BearingPoint; become more strategy focused, or form alliance with Investment Bank. Market for Pre-M&A Consulting Services: Revenue (Market Size = Total Transactions * % Used * Fee) 30 yr. mean M&A Transactions Data Total market = 3,935 * 100% * 1M = $3,935M 2003 M&A Transactions Data Total market = 5,212 * 100% * 1M = $5,212M Fees for investment banks in the pre-merger market have trended downward in the recent past as a result of increased competition. Deal activity began to pick up in 2003 and momentum has carried into 2004. Target firms for alliances should be selected based on deal activity Source: M&A Almanac, Feb 2004 Vol. 39 No. 2 Source: M&A: The Dealmaker’s Journal, March 2004 Vol. 39 No.3

Market for M&A Services: Revenue (Market Size = Total Transactions * % Used * Fee) 30 yr. mean M&A Transactions Data Total market = 3,935 * 100% * 1M = $3,935M Potential market = 3,935 * 55% * 1M = $2,164M Available market: Specific functional integration = 3,935* 37% * 1M = $1,456M Overall integration needs= 3,935 * 18% * 1M = $708M 100% 2003 M&A Transactions Data Total market = 5,212 * 100% * 1M = $5,212M 80 Potential market = 5,212 * 55% * 1M = $2,867M Available market: Specific functional integration = 5,212 * 37% * 1M = $1,930M Overall integration needs= 5,212 * 18% * 1M = $938M 60 Accenture/EIU Survey: Did your company use a PMI consultant? Yes – Overall integration needs 18% 40 Yes –Specific functional integration (IT) 37% No 45% 20 0 POST-MERGER MARKET The potential market for overall M&A integration consulting ~$2,164M Levels of Market - Demand Side Total market PopulationPercentage Potential market Specific Functional Integration Overall Integration Needs Penetrated market ? Market for M&A Services Definitions Total market - Total M&A Deals Potential market - Overall percentage of market utilizing PMI services Methodology: Market size was estimated using the number of transactions multiplied by the percentage of firms using specific and overall M&A integration services multiplied by an estimated transaction fee of $1M. Percentage used was determined by an Accenture EIU survey. Available market - Specific functional integration market Overall integration market - Penetrated market Customers that rely on BearingPoint for M&A Services Source: M&A Almanac, Feb 2004 Vol. 39 No. 2 Source: M&A: Post-merger integration: An Accenture survey conducted by the Economist Intelligence Unit, Jun 23, 2004

Quadrant 2 Quadrant 1 Broad Service Offering Broad Service Offering Standard Solution Tailored Solution Quadrant 2 Quadrant 1 Narrow Service Offering Narrow Service Offering Standard Solution Tailored Solution Quadrant 3 Quadrant 4 Quadrant 4 Quadrant 3 COMPETITIVE ANALYSIS -Competitive Market Positioning The management consulting industry can be defined in multiple ways. Defining it according to service offering breadth and product vs. consultant led not only examines market placement, but also business strategy focus Broad Deloitte Accenture PRTM IBM Perceptual Map Key BearingPoint Booz Allen Breadth of Service Offering McKinsey BearingPoint’s present position in the management consulting industry offers opportunities to attract clients, seeking holistic solutions, away from traditionally focused strategy consulting firms Quadrant 4 firms primarily focus on pre-merger service offerings Quadrant 1 firms attempt to achieve balance in M&A service offerings BAIN HP CSC AT Kearney BCG Roland Berger Narrow Standard Solution Offering Tailored Solution Competitors offering significant services within M&A Methodology: Researched overall number of services offered by firm, as well as number of consultants within each firm. Consultant number was normalized by overall firm size and used as a metric to measure a firms emphasis on tailored solutions

COMPETITIVE ANALYSIS– SWOT: Broad Service Offerings / Tailored Solution Industry diversification across services including M&A will be essential in maximizing profit potential Quadrant 1 Strengths Weakness Opportunities Threats • Gov’t ties • Capabilities designed to generate revenue and reduce costs • Utilize capabilities to expand into additional industries capturing market share BearingPoint Broadly focused Not sought to provide in-depth expertise Large market reach provides opportunities for growth in strategy consulting engagements Attractiveness of substantial revenues is encouraging traditional strategy-focused consulting firms to expand offerings and seek acquisitions providing complementary services Ability to provide holistic solution • Too reliant on certain industries • High competition in saturated industries • Depth of experience • Massive man power Accenture • Multi-disciplinary nature • Known in national & global markets Deloitte • Strong tech capabilities • Strong culture PRTM BearingPoint’s ability to become a major player in M&A hinges on its ability to offer clients strong strategic as well practical solutions & implementation

COMPETITIVE ANALYSIS– SWOT: Narrow Service Offerings / Tailored Solution Opportunities Quadrant 4 Strengths Weakness Threats Narrowly focused Inability to proved complete solution Inability to generate revenues comparable to broad service providers • EDS merger • Foundation in tech sectors Threat of broader providers seeking to obtain more “Strategy” work Specificity of services leading to loss of clients seeking one-stop solutions Opportunity to expand services, capturing greater market share Reputation creates extensive opportunities for joint venture relationships AT Kearney High Brand Equity top-level engagements Global Reach Mostly privatized allowing for sustainability of competitive advantages • Cross sector work • Govt. consulting Booz Allen Hamilton • Clients outperform market 3:1 • Small-Med. Sized client base • Strong culture Bain & Company • Known as a solution innovator • Strong culture BCG Market Leaders are not invincible, but they recognize the need to protect industry position and are active in doing so • Considered most powerful • Serves more than 2/3 of Fortune 1000 McKinsey

Multi-Variable Linear Regression Analysis An attempt was made to identify and quantify industry key success factors through public sources of information and a multiple-variable linear regression analysis Dependent variable: sales/employee Independent variables: years established # of industries served # of services available brand equity Results were both economically & statistically inconclusive COMPETITIVE ANALYSIS– Attempt to Quantify Firm Success

COMPETITIVE ANALYSIS – Competitive Industry Comparison (M&A) Industries served by BearingPoint Industries not served by BearingPoint Industries served by competitors Although the industries BearingPoint is focusing on cultivating for M&A service business are highly active in deal volume, they are also highly competitive and saturated markets

COMPETITIVE ANALYSIS– Competitive Industry Comparison (M&A) Industries served by BearingPoint Industries not served by BearingPoint Industries served by competitors Several industries heavily active in mergers and acquisitions are underserved. Furthermore some of these industries are areas where BearingPoint has competency

COMPETITIVE ANALYSIS– Competitive Service Offerings (M&A) M&A Service Offerings as a Percentage of Overall Service Offerings The following identified firms have made merger and acquisition services a primary portion of their overall service offering and will be BearingPoint’s primary competition within the M&A service market 2% < M&A Offering 5% < M&A Offering 11% >M&A Offering 1% > M&A Offering 1% < M&A Offering 100% 93% 83% 96% 86% 70% 81% 96% 80% 82% 95% 90% 80% 70% 60% 50% 40% 30% 30% 20% 20% 19% 18% 17% 14% 10% 7% 0% 5% 4% 4% Accenture AT Kearney Booz Allen Hamilton Bain & Company Boston Consulting Group Bearing Point Deloitte McKinsey PRTM Roland Berger Services Unrelated to M&A M&A Services

Number of Competing Services 1 4 5 3 8 5 6 6 8 Value Preservation Bearing Point Value Realization Bain & Company AT Kearney Booz Allen McKinsey Roland Berger Accenture Deloitte PRTM Value Creation BCG 80% 80% 67% 50% 100% 50% 70% 33% 100% 50% 20% 20% 33% 50% 100% 67% 30% COMPETITIVE ANALYSIS– Competitive Service Offerings (M&A) Premerger Services Strategy Articulation / Growth Shareholder Value Financial Due Diligence Operational Due Diligence Cultural Assessment Pricing Analysis & Allocation Valuation of Intangibles Post Merger Project Management Planning Realizing Merger Synergies Strategy Change Integration & Alignment Organizational Design Change Management Work Force Transition Communication Plan Cultural Alignment Employee Retention Compensation/ Benefit Alignment Additionally firms that target M&A services as primary business focus share multiple service offerings with BearingPoint. Recognizing which services competitors are offering as well as if they focus on pre or post-merger services will allow BearingPoint to tailor its service offerings more effectively

Most Active M&A Industries By Dollar Value - 2003 Most Active M&A Industries By Number of Deals - 2003 Industry Value ($bil) % of Total Industry No. of deals % of Total Investment & Commodity Firms $27.7 5.5% Business Services 999 16.7% Business Services 27.1 5.4 Software 457 7.6 Credit Institutions 26.0 5.2 Investment & Commodity Firms 226 3.8 Food 23.5 4.7 Insurance 221 3.7 Utilities 22.9 4.6 Real Estate 198 3.3 Real Estate 22.3 4.4 Electronic & Electrical Equip 194 3.2 Oil & Gas 21.4 4.3 Measuring, Med. & Photo. Equip. 185 3.1 Radio & TV Stations 21.2 4.2 Drugs 169 2.8 Commercial Banks 18.2 3.6 Oil & Gas 169 2.8 Transportation & Shipping 16.4 3.3 Durable Goods Wholesaling 155 2.6 Prospects of M&A Activity Survey of 1,301 Executives around the Globe: 45% Describe as good or excellent 46% Describe as fair 8% Describe as poor Source: M&A: The Dealmaker’s Journal, March 2004 Vol. 39 No.3 Survey done by Thomson Financialz TRENDS – U.S. Mergers & Acquisitions Speed of Completion Deal closing is taking much longer post 9/11, with increased due diligence – John Nidecker, “The Trends of M&A” NVST. 14 Jan 2002 “In terms of the speed of completing a deal, tier-1 advisors were found to be more efficient in terms of the amount of time required to complete deals, other things equal.” - Hunter & Jagtiani, “An analysis of advisor choice, fees, and effort in mergers and acquisitions.” Advisor Switching Costs “The more intense the prior banking relationship between the acquirer and the bank, the more likely it is that the bank will be chosen to advise the acquiring firm in a merger. This is because the acquirer extracts implicit or explicit commitments regarding access to bank loans in the future post-merger period.” -Julapa Jagtiani, Stavros Peristiani & Anthony Saunders. “The Role of Bank Advisors in Mergers and Acquisitions’ Investment Bank Consolidation “The new phenomenon is that there are more and more deals with multiple advisors…” Downward forces on fees in the recent past “will ultimately force investment banks to think the unthinkable: merge with themselves.” -Raghavan, Anita. “Deals and Deal Makers: Artful Deal Advisers Look Beyond Quantity.” The Wall Street Journal. 11 Dec. 2003.

Countries Most Active in U.S Acquisition - 2003 Countries Attracting U.S. Buyers - 2003 Advisor # of Deals Value ($bil) Advisor # of Deals Value ($bil) United Kingdom 151 $21.1 Canada 170 $7.6 Canada 122 4.2 United Kingdom 118 4.0 Germany 92 11.6 Japan 44 0.9 Australia 45 2.4 Germany 32 10.2 Japan 43 10.7 France 28 1.3 France 38 3.0 Australia 20 8.6 China 34 1.0 Switzerland 20 5.8 India 28 0.3 Sweden 16 0.3 Netherlands 28 2.2 Spain 12 0.1 Italy 27 1.7 Netherlands 12 0.1 TRENDS – Global Mergers & Acquisitions Firms within the us have begun to look abroad for acquisitions in order to gain a global presence. Contrarily foreign firm interest in acquiring U.S. companies has trended downward sine 2002.

RECOMMENDATIONS • Identify means to become more active in pre-merger consulting • Joint ventures / alliances w/ investment banking firms realizing high deal volume • Utilize “holistic solution approach” to attract customers early in the M&A process • Look to under-served industries as opportunities for growth in M&A revenue potential • Recognize industries served and services offered by competition in order to match BearingPoint capabilities with market needs • Increase transparency related to service offerings available within BearingPoint for M&A • M&A service website under SPT

QUESTIONS?

APPENDIX I: DATA SOURCES • Industries and companies based on original Bearing Point breakdown from master Excel file • Sources: • Securities and Exchange Commission: www.sec.gov • # of Companies Source: Hoovers Online • Market cap 2003 Source: www.yahoo.com • M&A Activity Source: SDC Platinum • Industry Betas: http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/Betas.html • Average value of proposed mergers / Reasons for failed mergers Sara B. Moeller, "Wealth destruction on a massive scale? “

Merger Integration